U.S., China appear to get little done in removing economic barriers

WASHINGTON (Reuters) - The United States and China urged each other on Wednesday to remove barriers to foreign investment, saying that business ties were vital to overall relations, although they appeared to achieve little beyond rhetoric at a high profile three-day meeting that was overshadowed by security rivalries.

U.S. Secretary of State John Kerry (R) toasts with Chinese Vice Premiers Liu Yandong at a joint banquet at the Strategic and Economic Dialogue (S&ED) at the State Department in Washington June 23, 2015. REUTERS/Yuri Gripas

Speaking to leading U.S. and Chinese CEOs on the final day of talks in Washington, Chinese Vice Premier Wang Yang said that while investment cooperation had made significant progress, “there are still problems and obstacles and this requires new ways of thinking, cooperation and policy environment.”

While the world’s two largest economies have $590 billion in two-way trade, efforts to secure a bilateral investment treaty have been stalled for seven years.

China upset U.S. firms when it imposed new financial cybersecurity rules that would effectively replace foreign tech products in bank systems after former U.S. National Security Agency contractor Edward Snowden disclosed that U.S. spy agencies had planted code in technology exports.

The move has been characterized by Washington as protectionism and was suspended in April after pushback from banks.

Beijing restricts foreign investment in vast swaths of its economy, and Washington hopes that an eventual investment treaty could open up China’s financial and telecom sectors.

The United States on its part reviews more investments from China over security concerns than it does of any other country, which has helped scuttle Chinese investments in everything from U.S. telecommunications infrastructure to wind farms.

U.S. Treasury Secretary Jack Lew told the CEO forum it was critical to have markets that foster fair competition.

“And it is also of vital importance that there are non-discriminatory technology policies and open trade in information and communications technology goods,” he said.

Tensions over cyber attacks on U.S. government computers that U.S. officials have blamed on Chinese hackers and China’s pursuit of territorial claims in the disputed South China Sea, have threatened to hamper efforts to deepen economic ties, although U.S. officials have sought to stress that talks aimed at deepening economic relations have continued.

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Wang Yang later went with other senior Chinese officials to meet President Barack Obama at the White House.

Zhang Xiangchen, a Chinese deputy trade minister, said on Tuesday Washington should remove barriers imposed for national security reasons, although he acknowledged that China had further to go than America in improving its investment climate.

At the same time as Beijing and Washington struggled over implementing closer economic ties, Europe was weighing whether to open further to China under World Trade Organization rules.

Reporting by David Brunnstrom and Jason Lange; Additional reporting by Roberta Rampton; Editing by Lisa Shumaker